CLAYTON STATE UNIVERSITY
MORROW, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2015
A Member Institution of the University System of Georgia
Georgia Department of Audits and Accounts Greg S. Griffin State Auditor

CLAYTON STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I FINANCIAL LETTER OF TRANSMITTAL SELECTED FINANCIAL INFORMATION EXHIBITS A STATEMENT OF NET POSITION - (GAAP BASIS) B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (GAAP BASIS) C STATEMENT OF CASH FLOWS - (GAAP BASIS) D SELECTED FINANCIAL NOTES

Page
2 3 4 7

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND

25

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(STATUTORY BASIS) BUDGET FUND

26

3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET

BY PROGRAM AND FUNDING SOURCE

(STATUTORY BASIS) BUDGET FUND

27

4 STATEMENT OF CHANGES TO FUND BALANCE

BY PROGRAM AND FUNDING SOURCE

(STATUTORY BASIS) BUDGET FUND

29

5 RECONCILIATION OF BUDGET TO GAAP

31

6 RECONCILIATION OF SALARIES AND TRAVEL

33

SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

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CLAYTON STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

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SECTION I FINANCIAL

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Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 29, 2016

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Dr. Tim Hynes, President Clayton State University
Ladies and Gentlemen:
As part of our audits of the basic financial statements of the University System of Georgia presented in the Annual Financial Report for the University System of Georgia, the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2015, we have performed certain audit procedures at Clayton State University. Accordingly, the financial statements and compliance activities of Clayton State University were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of Clayton State University as of and for the year ended June 30, 2015. Information contained in this report is a by-product of our audits of the basic financial statements of the University System of Georgia and the basic financial statements of the State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.
This report is intended solely for the information and use of the management of Clayton State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully,

GSG:er

Greg S. Griffin State Auditor

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SELECTED FINANCIAL INFORMATION

CLAYTON STATE UNIVERSITY STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2015
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Receivables - Federal Financial Assistance Receivables - Other Due from Affiliated Organizations Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Investments (Externally Restricted) Due from USO - Capital Liability Reserve Fund Notes Receivable, Net Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources Related to Defined Benefit Pension Plans
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Deposits Advances (including Tuition and Fees) (Note 5) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Net Pension Liability
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources Related to Defined Benefit Pension Plans
NET POSITION
Net Investment in Capital Assets Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Position
-2 -

EXHIBIT "A"

$

6,367,523

2,123,708 2,428,997
21,251 1,166,412
244,556

12,352,447

27,089 1,473,715
578,205 80,300
117,156,805
119,316,114
131,668,561

2,479,600

1,060,087 154,417 7,224
2,312,343 59
656,675 838,836 1,281,677
6,311,318
75,512,485 1,103,189
22,090,690
98,706,364
105,017,682
7,694,170

40,805,484
1,769,524 22,064
-21,160,763

$

21,436,309

CLAYTON STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2015
OPERATING REVENUES
Student Tuition and Fees (Net of Allowance for Doubtful Accounts) Less: Scholarship Allowances
Grants and Contracts Federal State Other
Sales and Services Rents and Royalties Auxiliary Enterprises
Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal Other Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Expenses
Net Nonoperating Revenues
Loss Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State
Decrease in Net Position
Net Position - Beginning of Year, Originally Reported
Prior Year Adjustments
Net Position - Beginning of Year, Restated
Net Position - End of Year

EXHIBIT "B"

$

38,303,023

-11,582,095

1,296,257 5,165
247,269 1,864,456
60,994

6,181,630 3,435,623
334,919 499,494 730,288 2,458,509 365,127 138,333

44,338,992

20,394,488 20,497,114 11,270,551
284,490 523,110 10,076,781 2,933,338 15,519,402 5,586,961
87,086,235
-42,747,243

24,192,783
17,617,943 386,668 849,754 49,013
-3,690,828 -108,031
39,297,302
-3,449,941
1,468,020
-1,981,921
52,078,927
-28,660,697
23,418,230

$

21,436,309

-3 -

CLAYTON STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts (Exchange) Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts
Net Cash Used by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Expenses
Net Cash Flows Provided by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net Decrease in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

$

26,735,915

1,140,813

1,864,456

-31,456,844

-40,599,933

-10,076,781

-3,300

6,094,588 3,756,868
324,935 496,035 708,772 2,420,024 273,487 207,787

-38,113,178

24,192,783 -1,044,479 18,854,365
-105,472
41,897,197

1,468,020 -1,902,048
-493,767 -3,690,828
-4,618,623

51,912 -782,692 7,177,304

$

6,394,612

-4 -

CLAYTON STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2015
RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Salaries Payable Advances (including Tuition and Fees) Other Liabilities Compensated Absences Net Pension Liability Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources
Net Cash Used by Operating Activities
NONCASH ACTIVITY Change in Fair Value of Investments Recognized as a Component of Interest Income

EXHIBIT "C"

$

-42,747,243

5,586,961
-1,941,657 267,009 102,642 -3,300 43,263 -144,314
1,267,131 83,928
264,306 -8,297,862
7,694,170 -288,212

$

-38,113,178

$

-2,899

-5 -

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Clayton State University (the University) is one of thirty (30) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Clayton State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Clayton State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Clayton State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
FINANCIAL STATEMENT PREPARATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the University's assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues, expenses, changes in net position and cash flows.
BASIS OF ACCOUNTING For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues, are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-University transactions have been eliminated.
NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2015, the University adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement requires a restatement to beginning net position. The adoption of this statement has a significant impact on the University's financial statements.
In fiscal year 2015, the University adopted Governmental Accounting Standards Board (GASB) Statement No. 69, Government Combinations and Disposals of Government Operations. This statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement also requires that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The adoption of this statement does not have a significant impact on the University's financial statements.
In fiscal year 2015, the University adopted Governmental Accounting Standards Board (GASB) Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB No. 68. The objective of this statement is to improve accounting and financial
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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of statement. This statement amends paragraph 137 of Statement No. 68 which limited recognition of pension-related deferred outflows of resources and deferred inflows of resources at the transition to circumstances in which it is practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions. Adoption of this statement in conjunction with GASB No. 68 had a significant impact on the University's financial statements.
PENSIONS For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and Employees' Retirement System (ERS), additions to/deductions for TRS's and ERS's fiduciary net position have been determined on the same basis as they are reported by TRS and ERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
CAPITAL LIABILITY RESERVE FUND In fiscal year 2014, the Capital Liability Reserve Fund (Fund) was established by the Board of Regents to protect the fiscal integrity of the University System of Georgia (USG) to maintain the strongest possible credit ratings associated with Public Private Venture (PPV) projects and to ensure that the Board of Regents can effectively support its long-term capital lease obligations. The Fund is financed by all USG institutions participating in the PPV program. The Fund serves as a pooled reserve that is managed by the Board of Regents. The Fund shall only be used to address significant shortfalls and only insofar as a requesting USG institution is unable to make the required PPV capital lease payment to the designated cooperative organization. The Fund will continue as long as the Board of Regents has rental obligations under the PPV program and at the conclusion of the program, funds will be returned to the University. Clayton State University's contribution to the fund as of June 30, 2015 was $578,205.
NET POSITION The University's net position is classified as follows:
Net Investment in Capital Assets: This represents the University's total investment in capital assets, net of outstanding debt obligations and deferred inflows, or resources related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of the net investment in capital assets.
Restricted - nonexpendable: Nonexpendable restricted net position consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code 44-15-7 of Annotated Code of Georgia.
Restricted - expendable: Restricted expendable net position includes resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

Unrestricted: Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the categories above. Included in the net deficit reported is the University's Net Pension liability of $22 million which is required for financial reporting and will not impact the economics of the plan or affect budgets or cash flows.

RESTATEMENT NOTE DISCLOSURE For fiscal year 2015, the University made prior period adjustments due to the adoption of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, and GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date, which require the restatement of the June 30, 2014, net position. The result is a decrease in Net Position at July 1, 2014 of $28,197,164 of which $30,388,552 is represented in Net Pension Liability and $2,191,388 is represented in deferred outflow. This change is in accordance with generally accepted accounting principles.

Additional prior period adjustments were noted during the financial statement analysis for fiscal year 2015 that were related to fiscal year 2014. The result is a decrease in Net Position at July 1, 2014 of $463,533. (a) $486,360 was due to unrecorded expenditures in fiscal year 2014. These expenditures should have been recorded in fiscal year 2014 and would have decreased Net Position in fiscal year 2014. (b) $22,827 was due to unrecorded accounts receivable and revenue that should have been recorded for fiscal year 2014, therefore increasing the balance in Net Position.

Net Position, July 1, 2014, as previously reported GASB Statement No. 68

$

52,078,927

-28,197,164

Unrecorded Expenditures Unrecorded Accounts Receivable

$

-486,360

22,827

-463,533

Net Position, July 1, 2014, as restated

$

23,418,230

NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2015, the carrying value of deposits was $5,738,015 and the bank balance was $7,318,959. Of the University's deposits, $7,318,959 were uninsured. Of these uninsured deposits, $7,318,959 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
INVESTMENTS At June 30, 2015, the carrying value of the University's investment was $2,123,003, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and Office of State Treasurer investment pool as follows:

Investment Pool Board of Regents Short-Term Fund Total Return Fund

$

295,775

1,473,715

1,769,490

Office of the State Treasurer Georgia Fund 1
Total Investments

353,513

$

2,123,003

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits and Accounts Education Audit Division or on their web site at http://www.audits.ga.gov.

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

The Georgia Fund 1 Investment Pool, managed by the Office of the State Treasurer, is not registered with the Securities and Exchange Commission as an investment company, and the State does not consider Georgia Fund 1 to be a 2a7-like pool. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAf rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 56 days.

Both the Board of Regents Short-Term Fund and the Georgia Fund 1 investment pools are reported as Cash and Cash Equivalents in the financial statements of this report.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2015.

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal Financial Assistance

Due from Affiliated Organizations

Other

916,440 542,658 2,123,708
21,251 1,217,734

Less Allowance for Doubtful Accounts

4,821,791 247,835

Net Accounts Receivable

$

4,573,956

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS Following are the changes in the University's capital assets for the year ended June 30, 2015:

Beginning Balance July 1, 2014

Capital Assets, Not Being Depreciated: Land Construction Work-In-Progress

$

2,195,001

889,627 $

Total Capital Assets, Not Being Depreciated

3,084,628

Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

82,943,445 145,440
7,717,290 76,088,876
7,819,695

Additions

Reductions

Ending Balance June 30, 2015

884,301 $ 884,301
548,258 469,489

$ 67,950 67,950
79,330 31,916

2,195,001 1,705,978
3,900,979
82,943,445 145,440
8,186,218 76,088,876
8,257,268

Total Assets Being Depreciated
Less: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

174,714,746
33,293,230 65,908
5,398,383 11,948,491
6,139,739

1,017,747
2,146,318 7,229
544,986 2,536,296
352,132

111,246
35,375 31,916

175,621,247
35,439,548 73,137
5,907,994 14,484,787
6,459,955

Total Accumulated Depreciation

Total Capital Assets, Being Depreciated, Net

Capital Assets, Net

$

56,845,751 117,868,995 120,953,623 $

5,586,961 -4,569,214 -3,684,913 $

67,291 43,955 111,905 $

62,365,421 113,255,826 117,156,805

A comparison of depreciation expense for the last three fiscal years is as follows:

Fiscal Year

Depreciation Expense

2015 2014 2013

$

5,586,961

$

5,844,510

$

5,581,904

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

NOTE 5: ADVANCES

Advances consisted of the following at June 30, 2015.

Prepaid Tuition and Fees Research Other Advances

$

2,146,476

5,406

160,461

Total Advances

$

2,312,343

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES The University's Long-Term liability activity for the year ended June 30, 2015 was as follows:

Beginning Balance July 1, 2014 (Restated)

Additions

Reductions

Ending Balance June 30, 2015

Current Portion

Leases Lease Obligations

$ 76,845,088 $

0$

493,767 $ 76,351,321 $

838,836

Other Liabilities Compensated Absences Net Pension Liability

2,120,561 30,388,552

1,575,688

1,311,383 8,297,862

2,384,866 22,090,690

1,281,677

Total

32,509,113

1,575,688

9,609,245

24,475,556

1,281,677

Total Long-Term Obligations

$ 109,354,201 $ 1,575,688 $ 10,103,012 $ 100,826,877 $ 2,120,513

NOTE 7: NET POSITION Changes in Net Position for the year ended June 30, 2015 are as follows:

Beginning Balance July 1, 2014 (Restated)

Additions

Reductions

Ending Balance June 30, 2015

Net Investment in Capital Assets

$

44,108,535 $

Restricted Net Position

1,408,463

Unrestricted Net Position

-22,098,768

Total Net Position

$

23,418,230 $

1,902,048 $ 19,897,917 65,893,884 87,693,849 $

5,205,099 $ 19,514,792 64,955,879 89,675,770 $

40,805,484 1,791,588
-21,160,763 21,436,309

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

The amounts within each category at June 30, 2015 were as follows:

NET POSITION Net Investment in Capital Assets

$

40,805,484

Restricted for Nonexpendable Permanent Endowment

1,769,524

Expendable Restricted E&G and Other Organized Activities
Federal Loans Institutional Loans
Sub-Total

-2,246 7,335 16,975 22,064

Unrestricted R & R Reserve Reserve for Encumbrances Other Unrestricted Sub-Total

527,597 6,567,462 -28,255,822 -21,160,763

TOTAL NET POSITION

$

21,436,309

NOTE 8: ENDOWMENTS

Donor Restricted Endowments: Investments of the University's endowment funds are pooled, unless required to be separately invested by the donor. For University controlled, donor-restricted endowments, where the donor has not provided specific instructions, the Board of Regents permits Clayton State University to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determined to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Current year net appreciation for the endowment accounts was $347,647 and is reflected as restricted net position.

NOTE 9: LEASE OBLIGATIONS

Clayton State University is obligated under an operating lease for the use of real property (land, buildings, and office facilities) and also is obligated under capital leases and installment purchase agreements for the acquisition of real property and equipment.

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2015 and 2024. Payments for fiscal year 2015 were $4.4 million of which $3.6 million represented interest and $313,071 represented executory costs. Total principal paid on capital leases was $493,767 for the fiscal year ended June 30, 2015. Interest rates range from 4.795% to 4.83%. The following is a summary of the carrying values of assets held under capital lease at June 30, 2015:

Outstanding

Net Capital Assets

Balances

Held Under

per Lease

Accumulated

Capital Lease at

Schedules at

Description

Gross Amount

Depreciation

June 30, 2015

June 30, 2015

(+)

(-)

(=)

Buildings - (PPV)

$

76,088,876 $ 14,484,787 $ 61,604,089 $ 76,351,321

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
The following capital lease schedule lists the pertinent information for each lease including the building name, lessor, total principal amount, lease term, lease begin date, lease end date, and remaining long-term debt as of June 30, 2015:

CAPITAL LEASE SCHEDULE

Description
Clayton Station University Apartments Clayton Student Activities Center Laker Hall
Total Leases

(1) Lessor

Original Principal Lease Term

CSU Foundation LLC $ CSU Foundation LLC II CSU Foundation LLC II

30,140,117 21,037,011 24,911,748

30 Years 30 Years 30 Years

$

76,088,876

Begin Date
2012 2008 2008

End Date

Outstanding Principal Balance at June 30, 2015

2042 $ 2038 2038

31,082,870 20,327,382 24,941,069

$

76,351,321

(1) These capital leases are with related entities.
OPERATING LEASES Clayton State University's noncancellable operating lease provides for a renewal option each year at the fair rental value at the time of renewal. The agreement is cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, the operating lease is generally renewed or replaced by another lease. The operating lease is generally payable on a monthly basis.
University fiscal year 2015 expense for rental of real property and equipment under the operating lease was $216,371.

- 15-

CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for the noncancellable operating lease having remaining terms in excess of one year as of June 30, 2015, were as follows:

Capital Leases

Operating Lease

Year Ending June 30: 2016 2017 2018 2019 2020 2021 - 2025 2026 - 2030 2031 - 2035 2036 - 2040 2041 - 2042

$

4,820,791 $

4,937,993

5,038,624

5,165,823

5,295,917

27,716,619

30,061,012

32,746,120

26,054,057

4,981,225

242,507

Total Minimum Lease Payments

146,818,181 $

242,507

Less: Interest Less: Executory Costs (if paid)

58,613,123 11,853,737

Principal Outstanding

$

76,351,321

NOTE 10: RETIREMENT PLANS
Clayton State University participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers' Retirement System of Georgia (TRS). These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective administrative offices.
The significant retirement plans that Clayton State University participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
Teachers' Retirement System of Georgia and Employees' Retirement System of Georgia
General Information about the Teachers' Retirement System
Plan description: All teachers of the University as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) are provided a pension through the Teachers' Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications.

- 16-

CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2015. The University's contractually required contribution rate for the year ended June 30, 2015 was 13.15% of annual University payroll. University contributions to TRS were $2,408,322 for the reporting period (fiscal year ended June 30, 2015) and $2,183,848 for the measurement period (fiscal year ended June 30, 2014). Contributions are expected to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
General Information about the Employees' Retirement System
Plan description: ERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.
Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon the monthly average of the members highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the members monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

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CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The University's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2015 was 21.96% of annual covered payroll for old and new plan members and 18.87% for GSEPS members. The University's contributions to ERS were $12,915 for the reporting period (fiscal year ended June 30, 2015) and $7,504 for the measurement period (fiscal year ended June 30, 2014). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2015, the University reported a liability for its proportionate share of the net pension liability for TRS and ERS totaling $22,090,690. The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The University's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2014. At June 30 2014, the University's TRS proportion was .174317% which was an increase of .000369% from its proportion measured as of June 30, 2013. At June 30, 2014, the University's ERS proportion was .001814% which was an increase of .000200% from its proportion measured as of June 30, 2013.

For the year ended June 30, 2015, the University recognized pension expense of $1,521,445 for TRS and $7,888 for ERS. At June 30, 2015, the University reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflow of Resources

TRS Deferred Inflows of Resources

ERS

Deferred

Deferred

Outflow of

Inflows of

Resources

Resources

Net difference between projected and actual earnings on pension plan investments

$

7,677,564

$

16,606

Changes in proportion and differences

between University contributions

and proportionate share of contributions

$

52,391

$

5,972

University contributions subsequent to the measurement date

2,408,322

12,915

Total

$

2,460,713 $

7,677,564 $

18,887 $

16,606

- 18-

CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

University contributions subsequent to the measurement date of $2,408,322 for TRS and $12,915 for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

ERS

2016 2017 2018 2019 2020

$ -1,907,484 $

$ -1,907,484 $

$ -1,907,484 $

$ -1,907,485 $

$

4,764

-419 -1,912 -4,151 -4,152

Actuarial assumptions: The total pension liability as of June 30, 2014 was determined by an actuarial valuation as of June 30, 2013 using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers' Retirement System:

Inflation Salary increases Investment rate of return

3.00% 3.75% - 7.00%
7.50%

average, including inflation net of pension plan investment expense
including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.
Employees' Retirement System:

Inflation Salary increases Investment rate of return

3.00% 5.45% - 9.25%
7.50%

average, including inflation net of pension plan investment expense
including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for the periods after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back eleven years for males for the period after disability retirement.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.
The long-term expected rate of return on TRS and ERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term
- 19-

CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class

Target Allocation

Long-Term Expected Real Rate of Return *

Fixed Income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%

3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

Total

100.00%

* Rates shown are net of the 3.00% assumed rate of inflation

Discount rate: The discount rate used to measure the total TRS and ERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and ERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the University's proportionate share of the net pension liability to changes in the discount rate: The following presents the University's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the University's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers' Retirement System:
University's proportionate share of the net pension liability

1% Decrease (6.50%)

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$ 40,584,796 $ 22,022,654 $ 6,737,115

Employees' Retirement System:
University's proportionate share of the net pension liability

1% Decrease (6.50%)
$ 99,210

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$ 68,036

$ 41,500

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and ERS financial reports which are publically available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs, respectively.

- 20-

CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or all exempt full and partial benefit eligible employees, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from three approved vendors (VALIC, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Clayton State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers' Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2015, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Clayton State University and the covered employees made the required contributions of $1,680,726 (9.24%) and $ 1,090,223 (6%), respectively.
VALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
NOTE 11: RISK MANAGEMENT
The University System of Georgia offers its employees and retirees access to four different healthcare plan options. For the University System of Georgia's Plan Year 2015, the following healthcare plan options were available:
BlueChoice HMO Comprehensive Care Plan Consumer Choice HSA Plan Kaiser Permanente HMO
Clayton State University and participating employees and retirees pay premiums to the healthcare plan options to access benefits coverage. The respective health plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with the selfinsured plans; including the BlueChoice HMO, Comprehensive Care Plan and Consumer Choice HSA Plan.
The reserves for these plans are considered to be a self-sustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to serve as the claims administrator for the selfinsured healthcare plans. In addition to the self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HMO healthcare plan option is also offered to System employees through Kaiser Permanente.
- 21-

CLAYTON STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2015

EXHIBIT "D"

The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Clayton State University, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated 45-9-1.
The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 12: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Clayton State University expects such amounts, if any, to be immaterial to its overall financial positions.
Litigation, claims and assessments filed against Clayton State University (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015.
NOTE 13: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.

- 22-

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2015 plan year, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%. As of June 30, 2015, there were 216 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2015, Clayton State University recognized as incurred $863,998 of expenditures, which was net of $401,462 of participant contributions. NOTE 14: AFFILIATED ORGANIZATIONS Clayton State University Foundation, Clayton State University Real Estate Foundation, Clayton State University Research Foundation, Clayton State University Athletic Foundation, and Spivey Hall Foundation are legally separate, tax exempt organizations whose activities primarily support Clayton State University. These affiliated organizations are considered potential component units of the State of Georgia in accordance with GASB Statement No. 61, 39 and 14. Therefore, the financial statements of these affiliated organizations are not included in these financial statements. Copies of the financial statements for the affiliated organizations may be obtained from Clayton State University.
-23-

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SUPPLEMENTARY INFORMATION

CLAYTON STATE UNIVERSITY BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2015
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Advances (including Tuition and Fees) Funds Held for Others Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

4,502,746.36

610,206.51 3,766,010.27
159,962.99

$

9,038,926.13

$

123,025.02

5,174,951.45

399,193.86

1,409,281.53

-2,021.06

7,031.45

7,111,462.25

364,071.31 337,969.01 199,067.82 385,738.27 628,122.71
12,494.76
1,927,463.88

$

9,038,926.13

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
-25 -

CLAYTON STATE UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2015

SCHEDULE "2"

REVENUES State Appropriation State General Funds Other Funds Total Revenues
CARRY-OVER FROM PRIOR YEARS Transfers from Reserved Fund Balance Total Funds Available
EXPENDITURES Public Service/Special Funding Initiative Teaching Total Expenditures Excess of Funds Available over Expenditures
FUND BALANCE JULY 1 Reserved
ADJUSTMENTS Prior Year Payables/Expenditures Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30
SUMMARY OF FUND BALANCE Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over Total Reserved Unreserved Surplus
Total Fund Balance

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$

24,192,783.00 $

24,192,783.00 $

0.00

61,184,465.00

58,531,198.36

-2,653,266.64

85,377,248.00

82,723,981.36

-2,653,266.64

0.00 85,377,248.00

1,719,648.93 84,443,630.29

1,719,648.93 -933,617.71

125,662.00 85,251,586.00

85,377,248.00

$

0.00

116,630.91 82,729,614.11
82,846,245.02
1,597,385.27 $

9,031.09 2,521,971.89
2,531,002.98
1,597,385.27

2,046,316.29

3,411.25 -1,719,648.93

$

1,927,463.88

$

364,071.31

337,969.01

199,067.82

385,738.27

628,122.71

1,914,969.12

12,494.76

$

1,927,463.88

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
-26 -

CLAYTON STATE UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2015

Public Service/Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

0.00 $

0.00 $

125,662.00 $

125,662.00

24,067,121.00 56,872,650.00
80,939,771.00

24,067,121.00 56,872,650.00
80,939,771.00

24,067,121.00 61,184,465.00
85,251,586.00

24,067,121.00 58,531,198.36
82,598,319.36

$

80,939,771.00 $

80,939,771.00 $

85,377,248.00 $ 82,723,981.36

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
-27 -

SCHEDULE "3"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Negative

Expenditures Compared to Budget

Variance

Actual

Positive

Excess of Funds Available
Over Expenditures

$

0.00 $

0.00 $

125,662.00 $

0.00 $

116,630.91 $

9,031.09 $

9,031.09

0.00 1,719,648.93
1,719,648.93

0.00 0.00
0.00

24,067,121.00 60,250,847.29
84,317,968.29

0.00 -933,617.71
-933,617.71

24,067,121.00 58,662,493.11
82,729,614.11

0.00 2,521,971.89
2,521,971.89

0.00 1,588,354.18
1,588,354.18

$ 1,719,648.93 $

0.00 $ 84,443,630.29 $

-933,617.71 $ 82,846,245.02 $

2,531,002.98 $

1,597,385.27

-28 -

CLAYTON STATE UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2015

Public Service/Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity
Prior Year Reserves Not Available for Expenditure Uncollectible Accounts Receivable

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2014
Surplus

Prior Period Adjustments

$

0.00 $

0.00 $

0.00 $

0.00

0.00 1,719,648.93
1,719,648.93
1,719,648.93

0.00 -1,719,648.93
-1,719,648.93
-1,719,648.93

0.00 0.00
0.00
0.00

411.25 3,000.00
3,411.25
3,411.25

326,667.36

0.00

0.00

0.00

Budget Unit Totals

$

2,046,316.29 $

-1,719,648.93 $

0.00 $

3,411.25

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
-29 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2015
Surplus

Excess of Funds Available
Over Expenditures

Ending Fund Balance June 30

Analysis of Ending Fund Balance

Reserved

Surplus

Total

$

0.00 $

0.00 $

9,031.09 $

9,031.09 $

0.00 $

9,031.09 $

9,031.09

0.00 -59,070.91
-59,070.91
-59,070.91

0.00 0.00
0.00
0.00

0.00 1,588,354.18
1,588,354.18
1,597,385.27

411.25 1,532,283.27
1,532,694.52
1,541,725.61

0.00 1,529,230.85
1,529,230.85
1,529,230.85

411.25 3,052.42
3,463.67
12,494.76

411.25 1,532,283.27
1,532,694.52
1,541,725.61

59,070.91

0.00

0.00

385,738.27

385,738.27

0.00

385,738.27

$

0.00 $

0.00 $

1,597,385.27 $ 1,927,463.88 $ 1,914,969.12 $

12,494.76 $ 1,927,463.88

Summary of Ending Fund Balance Reserved
Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Ending Fund Balance - June 30

$

364,071.31

337,969.01

199,067.82

385,738.27

628,122.71

$

$ 1,914,969.12 $

$

364,071.31

337,969.01

199,067.82

385,738.27

628,122.71

12,494.76

12,494.76

12,494.76 $ 1,927,463.88

-30 -

CLAYTON STATE UNIVERSITY RECONCILIATION OF BUDGET TO GAAP
YEAR ENDED JUNE 30, 2015
Presented below is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.
Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1")
Amounts reported for Business-Type Activities in the Statement of Net Position are different because:
Capital Assets used in Business-Type Activities are not reported in the Budget Fund.
Uncollectible accounts receivable are reported as an asset and reserved fund balance in the Budget Fund and as a contra-asset account on the Statement of Net Position.
Reserve for Student Accounts Receivable overstated in the Budget Fund. Total Net Effect of Uncollectible Accounts Receivable
Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity
Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Auxiliary Enterprises Fund Activity
Endowment Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Endowment Fund Activity
Loan Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Loan Fund Activity
Student Activities Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Student Activity Fund Activity
The budgetary basis of accounting implemented by the State of Georgia recognizes expenditures when encumbered. The following adjustments were made to eliminate this activity for reporting on the Statement of Net Position. Payables reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Payables for goods and services provided in the current fiscal year reported in the Budget Fund as encumbrances payable are reported as accounts payable for GAAP reporting. Reimbursement from grantors reported as revenues in the Budget Fund that are for expenditures based on encumbrances are deferred for GAAP reporting. Total Net Effect of Encumbrance Activity
Certain Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the Budget Fund. Capital Leases Payable Compensated Absences Payable Advances
Certain assets, deferred outflows of resources, liabilities and deferred inflows of resources are not reported in the budget funds. Defined Benefit Pension Plans
Total Liabilities
Unidentified Variance
Net Position of Business-Type Activities (Exhibit "A")

SCHEDULE "5"

$

1,927,463.88

117,156,805.00

$

-385,738.27

176,271.73

$

1,457,903.95

-1,458,472.93

$

3,266,941.38

164,905.33

$

1,769,524.36

0.00

$

24,310.06

0.00

$

1,178,884.14

-157,358.24

-209,466.54 -568.98
3,431,846.71 1,769,524.36
24,310.06 1,021,525.90

$

5,174,951.45

-262,074.23 -2,049,056.84

2,863,820.38

$

-76,351,321.00

-2,384,866.00

-503,554.00

-27,305,260.00

-106,545,001.00 -3,950.77

$

21,436,309.00

The supplementary information presented on Schedules 1, 2, 3, and 4 was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. The information was derived from, and relates directly to, the same information used to prepare the financial statements. However, the budgetary statutes and regulations of the State of Georgia require reporting of certain information that is not in accordance with generally accepted accounting principles. Presented on this schedule is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.
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CLAYTON STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2015

SCHEDULE "6"

Totals per Annual Supplement
Accruals June 30, 2015 June 30, 2014
Compensated Absences June 30, 2015 June 30, 2014
Adjustments Shared Services on Jointly Staffed Personnel Atlanta Metropolitan State College Blasingame, Dionne Strong, Nicole Georgia College and State University Gee, Allen Kitchens, Joshua Georgia Perimeter College DuPont, Akil Houghton, Stacey Shepard-White, Felicia West, Veronica Georgia State University Blanton, Shelia Gruszka, William Nteff, Grace Taylor-Hamrick, Terri Kennesaw State University Donahue, Amy Grooms, Tony Nakos, George Scott, Christine Valdosta State University Wright, S. Diane
Unidentified Variance

SALARIES

$

40,754,864 $

TRAVEL 523,110

154,417 -104,261

2,027,146 -1,969,866

-2,100 -6,300
428 3,000
5,460 -2,120 -4,583 2,000
4,200 44,000 -4,200 -1,115
300 1,000 -1,000 -7,448
500
-2,720

$

40,891,602 $

523,110

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SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

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CLAYTON STATE UNIVERSITY ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-528-14-01

Previously Reported Corrective Action Implemented

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

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SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

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CLAYTON STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)

Budget Basis Reporting Observation The University's Budget Compliance Report (BCR) was not supported by its Budget Ledger. Several accounts had variances due to incorrect activity being recorded in the Budget Ledger which resulted in uncorrected misstatements. In addition, the University did not adequately document all balance sheet accounts nor appropriately monitor the budget reporting process. Also, the University did not provide a reconciled Budget to GAAP Schedule.

Recommendation The University should review the internal control procedures currently in place, identify weaknesses, and enhance procedures necessary to strengthen controls over the preparation of the budget statements and review process.

Management's Response The University has reviewed its internal control procedures and processes and made changes to strengthen its controls to ensure the accuracy of its ledger. CSU modified and adopted new procedures to ensure this does not occur again. The University also has recalculated its beginning balances to identify and correct the root cause of the (Other Items Noted) mentioned in this audit. We are confident that will yield a proper reconciliation between the Budget Basis Report and the Budget Ledger.

Responsible Official

Contact Person: Naulbert Nolan, Director of Accounting Services

Telephone:

(678) 466-4256

Email:

NaulbertNolan@Clayton.edu

Financial Statement Preparation Process Observation Our review of the University's GAAP basis financial statements and Notes to the Financial Statements revealed errors and misstatements.

Recommendation While these errors and misstatements were relatively insignificant to the financial statements, we recommend that the University strengthen internal controls over the financial statement preparation and review process.

Management's Response CSU reviewed its internal control procedures and made changes to strengthen its controls to ensure an accurate Annual Financial Statement and Notes to the Financial Statements reporting. The University reviewed all beginning balances to identify and correct the root cause of the errors and misstatements. Also, the University has performed testing to ensure that prior year systematic entries to the financial records are proper and accurate and any corrections are made. We are confident that this will yield result of reduced errors and misstatements in the financial records.

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CLAYTON STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)

Responsible Official

Contact Person: Naulbert Nolan, Director of Accounting Services

Telephone:

(678) 466-4256

Email:

NaulbertNolan@Clayton.edu

Failure to Comply with Report Distribution Requirements Observation The University failed to submit written notification of the fiscal year 2014 audit to the three PassThrough Organizations from which the University received Federal funds in fiscal year 2014 as required by OMB Circular A-133, Paragraph 320.

Recommendation The University should implement policies and procedures which will ensure that all Single Audit reporting requirements are satisfied within thirty days of the issuance of the audit report.

Management's Response Because of a transition in staffing the notices were not timely mailed. The University has assigned responsibility to two additional individuals and now require those individuals to be contacted when the notice is transmitted.

Responsible Official

Contact Person: Naulbert Nolan, Director of Accounting Services

Telephone:

(678) 466-4256

Email:

NaulbertNolan@Clayton.edu

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